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Sea pirates cost between $5.7 and $6.1 billion

Staff writer |
Oceans Beyond Piracy (OBP), a project of the One Earth Future foundation (OEF), estimated that maritime piracy cost the global economy between $5.7 and $6.1 billion in 2012.

At between $5.7 and $6.1 billion, the cost of piracy to the global community fell by around $850 million, or 12.6% from 2011.

The cost of piracy dropped by about 12.6% since 2011. However, this moderate figure, combined with the significant drop of reported piracy attacks in the 2012, means that the "per incident" cost to the international community has risen dramatically.

Between 2011 and 2012, the number of attempts and hijackings fell much more drastically than the cost of combatting piracy. This led to a substantial increase in the "per incident" cost of piracy. In 2011, $28.6 million was spent per pirate attack, and in 2012, that number rose 189.0% to $82.7 million.

The most pronounced increase in the cost of piracy came as a result of the increased number of armed guards used to protect merchant vessels transiting the HRA. Between $1.15 and $1.53 billion was spent on armed guards in 2012. In 2011, that figure was $530.6 million. The cost of armed guards increased 79.7% in 2012.

In 2011, an estimated $2.7 billion was spent on above optimal speeds, but that figure was down to $1.53 billion in 2012. The observed $1.17 billion dollar decrease comes from a decline in the proportion of ships steaming at above optimal speeds as well as a reduction in the amount by which the average "speeding" ship steamed above the economically optimal level.

In 2012, OBP estimates that $31.75 million dollars in ransoms were paid to Somali pirates. This represents an 80.1% decline in ransoms paid from 2011, when $159.62 million was paid. The reduction in ransoms is due to the lower number of vessels captured and released in 2012, as well as a lower average ransom than the previous year.

Shipping companies spent $290.5 million re-routing along the Arabian Peninsula and Indian coast as opposed to taking a direct route. The sum spent on re-routing is down 47.9% from the amount estimated in 2011. However, the proportion of ships transiting around the Horn of Africa that chose to re-route only dropped by 10%.

The cost of various counter-piracy organizations, ranging from United Nations agencies to independent NGOs, was $24.08 million in 2012. This figure represents a 13% increase from the $21.3 million reported in 2011.

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